Operating Earnings Per Share: $0.52, a $0.04 increase linked quarter. Operating Efficiency Ratio: 56.7%. Operating Return on Assets: 1.25%. Operating Return on Average Tangible Common Equity: 15.95%. Tangible Book Value Per Share Growth: 13.8% annualized. Deposit Growth: $200 million or 3% driven by interest-bearing money market products. Total Loans Decline: $182 million during the quarter. Net Interest Income: $251 million, a $2.5 million decrease linked quarter. Net Interest Margin: Increased 2 basis points to 3.43%. Loan Yields: Declined 11 basis points to 5.86%. Average Cost of Total Deposits: Decreased 11 basis points to 2.03%. Noninterest Income: $67.2 million. Non-interest Expense: $182.9 million, a decrease of $7.8 million linked quarter. Provision Expense: Declined approximately $2.8 million to $13.9 million. Allowance for Credit Losses to Total Loans Ratio: Increased to 159%. Common Equity Tier 1 (CET1) Ratio: 11%.

Warning! GuruFocus has detected 3 Warning Sign with FULT.

Release Date: April 16, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Fulton Financial Corp (NASDAQ:FULT) reported an increase in operating earnings per share to $0.52, a $0.04 rise from the previous quarter. The company achieved a reduction in total operating expenses, contributing to an improved operating efficiency ratio of 56.7%. FULT maintained strong liquidity and grew its equity base, with tangible book value per share increasing by 13.8% on an annualized basis. Customer deposit growth was solid, with a $200 million increase driven by interest-bearing money market products. The company reported improvements in asset quality metrics, including a decline in the non-performing loan ratio and net charge-offs.

Negative Points

Total loans declined by $182 million during the quarter, impacted by strategic decisions and portfolio management activities. Loan yields decreased by 11 basis points to 5.86%, contributing to a $2.5 million decrease in net interest income. The allowance for credit losses to total loans ratio increased, indicating a cautious outlook on credit quality. FULT's non-interest income declined modestly due to day count and transactional activity, with fee income as a percentage of revenue at 21%. The company anticipates potential headwinds in net interest income and non-interest income due to a slower growth environment and possible interest rate cuts.

Q & A Highlights

Q: Can you talk more about loan growth and whether you expect it to pick up in the second half of the year? A: (Curtis Myers, CEO) Overall pipelines have increased year-over-year, but we remain cautious about the pull-through rate due to customer uncertainty. We have a good pipeline, but conversion is uncertain given the environment. Most of the first quarter's decline was due to strategic headwinds and specific actions we took.

Story Continues

Q: With the stock trading at tangible book value and stable credit trends, what's preventing you from resuming the buyback? A: (Curtis Myers, CEO) Our capital strategy prioritizes organic growth and corporate initiatives before buybacks. In the current environment with limited growth opportunities, buybacks make more sense, especially given current stock prices. We purchased about 30,000 shares at the end of the first quarter.

Q: How does a 25 basis point rate cut impact total net interest income (NII)? A: (Richard Kraemer, CFO) A 25 basis point cut would be a headwind of about $1.7 million annually.

Q: What are your thoughts on the credit environment and potential impacts from tariffs? A: (Curtis Myers, CEO) We're analyzing potential tariff impacts on our portfolio, particularly in agriculture and manufacturing. Our portfolio is very domestic, so direct import/export impacts are limited. We're monitoring commodity prices and margins closely.

Q: Can you provide more color on the risk management actions impacting loan growth? A: (Curtis Myers, CEO) We actively manage the credit book, and this quarter saw more resolutions of troubled assets than usual. We also took actions in the auto dealer book and were prudent in converting commercial construction to permanent loans, which impacted growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.